VR Labs application misleading

Company found to have no connection with Vitarich Laboratories.

Oct. 6, 2012

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VR Laboratories LLC, formed seven days before filing for $5 million in taxpayer money in 2010, said in its application it was doing business as Vitarich Laboratories, an existing Naples-based manufacturer of nutritional products.

But VR never had any connection with Vitarich despite using that company’s logo throughout the application.

VR’s application by Chief Administrative Officer Kay Gow used Vitarich’s address and even included financial projections showing how Vitarich could make hundreds of millions over the next five years if VR got the grant.

But Reiner Bosselmann, CEO of Vitarich’s then-parent company Argan Inc., said VR “at no time at all, never” owned Vitarich and never had serious prospects of doing so.

“That’s misleading, that’s wrong,” Bosselmann said of VR’s claims. “They expressed an interest in Vitarich, but they didn’t have the money, so I said, ‘Get lost.’^”

That was less than two years ago, and now VR’s proposed high-tech health drink bottling plant sits dark and empty in an Alico Road industrial park because the equipment supplier hasn’t been paid and the electricity’s been turned off for non-payment.

VR has spent $4.7 million of the $5 million grant fitting out the bottling plant building but has created only nine of the 214 jobs it’s promised to bring by 2016.

No money

Bosselmann, who sold Vitarich to pharmaceutical conglomerate NBTY in March 2011, said VR officials “wanted to buy it (Vitarich) and they wanted us, Argan, to finance it. Because they didn’t have any money.”

Gow didn’t include in the application any of Vitarich’s actual financials. In reality Vitarich was in bad shape: $18 million in losses over the past three years, according to NBTY’s SEC filings at the time of the acquisition.

It didn’t matter. The county’s staff never got financial documentation from the company and the director of the county’s Economic Development Office says staff put the request through to county commissioners without ever recommending it.

Economic Development Office Executive Director Jim Moore acknowledged he signed off on the agenda item that said staff recommended commissioners approve the project.

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But he called that an “oversight” and said he never made a written recommendation to approve the project.

“In retrospect that shouldn’t have been there and I signed off on it,” he said. “We (staff) made no recommendation.”

Moore said county officials knew at the time VR never owned Vitarich and “we were never privy” to VR’s financials despite a requirement in the office’s guidelines they be provided.

VR’s CEO, former lieutenant governor Jeff Kottkamp said Friday in an email “in the fall of 2010 the Gows (Kay and her husband Robert, a VR board member) were considering acquiring VitaRich” at about the same time they filed the application in October 2010.

But he noted that on Feb. 3, 2011, 12 days before the commission approved the project, VR filed an updated application leaving out the Vitarich references.

VR’s application also didn’t list criminal or civil fines or penalties, although both versions of the county application includes a page asking the question.

Both applications say simply “None,” but in fact the Gows were fined by the IRS for under-reporting millions in income from a Williamsburg, Va., timeshare.

The fines were upheld in a 2001 appeals court decision that said the Gows under-reported their taxes by $793,147 from 1989-1992. They were fined $158,628 in “accuracy-related penalties.”

Kottkamp responded: “Apparently they incurred what they were advised to be legitimate business expenses and claimed them on their tax returns. The IRS disagreed. They litigated the issue for a number of years. The matter was ultimately resolved. None of that has any relevance whatsoever to VR Laboratories.”

Over the past three weeks, both Gows have said they have no comment and referred questions to Kottkamp. Neither responded to an email Saturday requesting an interview.

The Gows, who live in Naples, were real estate developers in Williamsburg before moving here about 15 years ago.

Details sought

After The News-Press began investigating the matter and writing stories about the lack of documentation, the county requested detailed information from the company. It’s waiting for those details.

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Kottkamp says everything’s fine but last week he sent County Attorney Michael Hunt a letter refusing Hunt’s request VR explain how it’s progressing on the $9 million in capital spending required under the agreement.

Kottkamp also says in the letter VR’s not required to provide payroll records as Hunt requested but “we will make our employee information/documentation available for inspection (with the appropriate redactions) at a time that is mutually convenient.”

As of Friday, Hunt had not responded.

Also on Friday, the executive committee of the Horizon Council — a public-private board that advises county commissioners on economic issues — created a task force to formulate proposed guidelines for giving out jobs grants.

Some government and business leaders say the county needs stricter procedures when approving grants. At present only internal Economic Development guidelines exist and they’re sometimes ignored.

One problem is some applicants don’t have much of a track record and it’s hard to check them out, County Commission Chairman John Manning said Friday. “One of the things we debated today (at the Horizon Council) was what do we do with start-ups.”

Horizon Council president Kitty Green said the focus now should be on making sure the county spends its grant money wisely in the future.